Stop the False War of Words on Seniors Who Need Social Security

The New Press / By Nancy J. Altman, Eric R. Kingson

  

Stop the False War of Words on Seniors Who Need Social Security

 

The country faces a major retirement security crisis.

Photo Credit: The New Press

December 26, 2014  |  

 

 

 

 

(Editor’s note: The following is an excerpt from a new book, “Social Security Works! Why Social Security Isn’t Going Broke and How Expanding It Will Help Us All,” published by The New Press, 2015, all rights reserved. Order a copy here.) 

False, derogatory, stereotypes about older Americans abound.

Former Republican Sen. Alan Simpson (R-WY) has given particularly ugly voice to the noxious stereotype that seniors are self-centered retirees, driving luxury cars, enjoying endless rounds of golf, and leaving mountains of debt for their grandchildren by fighting cuts to Social Security benefits they don’t need. He routinely calls seniors and national senior organizations who object to cutting Social Security “greedy geezers,” “old cats 70 and 80 years old. . . who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount.” Despite polls showing that the overwhelming majority of Americans oppose Social Security benefit cuts, he categorizes opponents as follows:

“Who are the people howling and bitching the most? The people over 60. This makes no sense. You’ve got to scrub out {of] the equation the AARP, the Committee for the Preservation of Social Security and Medicare, the Gray Panthers, the Pink Panther, the whatever. Those people are lying. . . . [They] don’t  care a whit about their grandchildren . . . not a whit.”

Senator Simpson’s vitriolic attacks should be ignored as ignorant ravings of little consequence.  Unfortunately, as co-chair of President Obama’s 2010 deficit commission, Simpson was given a megaphone along with a gavel. And he’s enjoyed using that mega- phone. “I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree,” he proudly proclaimed. “You know ’em too… We’ve reached a point now where it’s like a milk cow with 310 million tits!”

How Fare Today’s Old?

But it is just plain false that most older Americans are on “easy street,” as Simpson’s rhetoric implies. A very small percentage are, including Simpson himself. But many more are poor, or near poor. Some seniors maintain a very modest middle-class lifestyle, often struggling to make ends meet. Others, often those employed or retired with significant pension and savings, may be very comfortable in the moment. But that can change with loss of employment, death of a spouse, costly illness, drops in housing prices, or precipitous declines in stock portfolios.

Numbers provide a snapshot of how today’s old are doing at just one point in time. Over time, the finances of any of us—even those who were well off at younger ages—can, and often do, change dramatically and for the worse. Take, for example, the story of Emma and James M., retired in 1993 at ages 64 and 62, respectively.

An accountant and nurse with good work histories, Emma and James had accumulated $350,000 in their company-sponsored 401(k) retirement plans and had another $75,000 in savings and investments, plus their Social Security. With their Columbus, Ohio, home paid off and their children through college, they looked forward to enjoyable retirement years. The first ten years were just that—travel, civic involvements, friends, and grand-parenting— notwithstanding James’ diagnosis in 1997 of Parkinson’s disease, controlled fairly well with medication.

Unfortunately, by 2003, James showed further deterioration—slurred speech, memory loss, depression, and difficulty managing personal hygiene. By 2005, taking care of her husband’s needs had become too hard for Emma to do alone. She contracted with a home care agency to provide personal care and chore services three days a week, expanding to seven days, before James entered a nursing home in 2008 as a private pay patient, costing roughly $70,000 a year. Besides James and Emma drawing heavily on their joint resources, the deep recession and drop in housing prices further diminished their resources. When James died in 2013, Emma, then 82, had very little other than her home and Social Security. She worries how she’ll get by if she needs support one day if the roof needs to be replaced.

Economic Well Being Is Not Poverty Or Near Poverty

The economic wellbeing of older Americans can be measured in a number of ways, including, for example, maintenance of one’s standard of living, wealth, or ability to subsist. By virtually any measure, the majority of today’s seniors are economically vulnerable. And tomorrow’s seniors are likely, on average, to be even more so.

Let’s start with the measure involving subsistence: whether or not people have enough income to purchase the bare necessities of life.

Widely used for fifty years and adjusted annually for inflation, the Census Bureau’s official U.S. poverty index establishes poverty thresholds for households, adjusted for such factors as number of people, presence of children, rural/urban location, and age. Ironically, it sets a higher poverty line for adults under age 65 than for those over 65— $11,945 for individuals under age 65 compared to $11,011 for those over age 65 in 2012; $15,374 for couples under age 65; $13,878 for couples over 65.7. Why the difference? The short explanation: the measure assumes that older people eat less!

Even more striking is how many people are at significant economic risk. Defining persons below the Census Bureau’s Supplemental Poverty Measure as poor and those between 100 percent and 200 percent of this measure as having very modest income, at any one point in time, nearly half (48 percent) of senior households, age 65 and over, live in poverty or very modest circumstances.
In other words, nearly half are either already unable to meet some basic needs such as food, clothing, and shelter, or are one serious economic setback away from not being able to do so. The percentage of women in this category of economic vulnerability is even higher. More than one out of two—52.6 percent—are poor, or economically vulnerable and at risk. For African Americans over age 65, the percentage is higher still—63.5 percent. For Hispanics, the percentage is 70.1 percent.

Moreover, this economic vulnerability increases with age. Fifty-eight percent of those age 80 or over are poor or just one shock away from becoming poor. An astounding three-quarters of African American and Hispanic women age 80 or over are also very much at risk!

Despite the stereotype of wealthy seniors, the economic security of even those seniors who do not fall into the various categories of economic vulnerability is not assured. Their incomes are likely to decline considerably as they advance in age; as they leave work; as inflation bites into their assets; as they draw down savings, which will accelerate if their or a spouse’s health declines; or if investments falter or unexpected financial expenses arise.
All these factors and trends illustrate the fact that America faces a growing retirement security crisis.


(Copyright © 2014 by Nancy J. Altman and Eric R. Kingson. This excerpt originally appeared inSocial Security Works! Why Social Security Isn’t Going Broke and How Expanding It Will Help Us All, published by The New Press in January 2015, and is used here with permission.)

 

Nancy J. Altman is the author of The Battle for Social Security, and a founding co-director of Social Security Works and co-chair the Strengthen Social Security Coalition.

Eric R. Kingson is a professor of social work at Syracuse University and a founding co-director of Social Security Works and co-chair the Strengthen Social Security Coalition.

Disadvantages of Private Health Care

Sang's Economics Blog

Disadvantages of Private Health Care

March 11, 2010 · 

Filed under Current Issues · Tagged care, disadvantage, externality, health, private, privatized, States, system, United

 

Economics Help: Click Here

1. Inequality

People who are low in income will have greater burden of medical fees than those with high income. Also, people with high income usually have medical insurance covered by their employing company. But, people with low income usually don’t have a medical insurance covered by their employers.

Children, students, or those with no jobs will not have a medical insurance. Some companies cover medical insurance for the employee’s children, however, majority of companies simple do not because of its expensive cost. So, children or student are vulnerable to injuries or disease as the medical fee will be so expensive for them.

2. Health Care is is a Merit Good and it has positive externalities.

Health care is indeed a merit good. However, in a country with many privatized hospitals, the consumption or usage of medical service is lower than the optimum consumption. So medical market fails due to under-consumption of medical services. So governments should intervene and support the health care.

Also, many people know that health care creates some positive externalities. A good medical system can contribute to a successful economy. An economy will be improved by people being treated quickly/efficiently which will help the improvement of labor productivity. In free-market system, this positive externality is ignored and therefore the health care market fails.

3. It is expensive.

Private hospitals do have motives to make profit out of medical services. You can quote on Adam Smith that all human beings are motivated by private profits. So, usually privatized hospitals charge its patients higher than government-owned hospitals. It is because the medical fee is not supported by the government. Also, they must have marginal profit so they would have raise the medial fee.

Single-Payer National Health Insurance

 

Single-Payer National Health Insurance

Single-payer national health insurance is a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private.

Currently, the U.S. health care system is outrageously expensive, yet inadequate. Despite spending more than twice as much as the rest of the industrialized nations ($8,160 per capita), the United States performs poorly in comparison on major health indicators such as life expectancy, infant mortality and immunization rates. Moreover, the other advanced nations provide comprehensive coverage to their entire populations, while the U.S. leaves 51 million completely uninsured and millions more inadequately covered.

The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. As a result, administration consumes one-third (31 percent) of Americans’ health dollars, most of which is waste.

Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $400 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs. Patients would no longer face financial barriers to care such as co-pays and deductibles, and would regain free choice of doctor and hospital. Doctors would regain autonomy over patient care.

Physicians would be paid fee-for-service according to a negotiated formulary or receive salary from a hospital or nonprofit HMO / group practice. Hospitals would receive a global budget for operating expenses. Health facilities and expensive equipment purchases would be managed by regional health planning boards.

A single-payer system would be financed by eliminating private insurers and recapturing their administrative waste. Modest new taxes, based on ability to pay, would replace premiums and out-of-pocket payments currently paid by individuals and business. Costs would be controlled through negotiated fees, global budgeting and bulk purchasing.

The links below will lead you to more specific information on the details of single-payer:

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Single-Payer Overviews

The Physicians Proposal for National Health Insurance
“Proposal of the Physicians’’ Working Group for Single-Payer National Health Insurance,” JAMA 290(6): Aug 30, 2003

Key Features of Single-Payer
A useful handout detailing the main features of single-payer.

Statement of Dr. Marcia Angell introducing the U.S. National Health Insurance Act
A great overview of the need for and logic of a single-payer system. Perfect as an introductory handout.

Liberal Benefits, Conservative Spending
Another great introductory handout.

The case for eliminating the private health insurance industry
By Don McCanne, MD and Leonard Rodberg, PhD

Single Payer—Fifty Players? Alternative Payers for Universal Health Insurance
By Thomas Bodenheimer, MD

Public Citizen's Response to the Citizens' Health Care Working Groups Interim Recommendations (En Español)
A great overview on the benefits of a single-payer system by Public Citizen.

Rep. Dennis Kucinich Tackles Health Care
Rep. Kucinich talks with Truthdig about the health care crisis in America.

Financing single-payer national health insurance: Myths and facts

The case for an improved Medicare for All

Download PNHP's Brochure

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Single Payer: Facts and Myths

Single Payer FAQ
A frequently-updated catalog of the most-asked questions about single-payer.

Myths as Barriers to Health Care Reform
A paper refuting many of the myths associated with single-payer.

“Mythbusters” by the Canadian Health Services Research Foundation
A series of brief papers debunking the common misconceptions about the Canadian health system.

“Moral Hazard:” The Myth of the Need for Rationing
Rasell, E “Cost Sharing in Health Insurance – A Reexamination,” New Eng J Med., 332(7) 1995

Roos, et al “Does Comprehensive Insurance Encourage Unnecessary Use?” Can. Med. Assoc. J 170(2) Jan. 20, 2004

Gladwell, M. “The Moral Hazard Myth,” New Yorker Aug. 29, 2005

Myths and Memes About Single-Payer Health Insurance in the United State: A Rebuttal to Conservative Claims
Geyman, John; International Journal of Health Services, Volume 35, Number 1, Pages 63–90, 2005

Two-thirds of Americans support Medicare for all
By Kip Sullivan, J.D.

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Health Economics and Financing

Introduction: How Much Would a Single-Payer System Cost?
A review of government and independent studies of the cost of single-payer system.

Administrative Waste Consumes 31 Percent of Health Spending
Woolhandler, et al “Costs of Health Administration in the U.S. and Canada,” NEJM 349(8) Sept. 21, 2003

Administrative Costs in U.S. Hospitals are More Than Double Canada’s
Woolhandler, et al “Administrative Costs in U.S. Hosptials,” NEJM 329, Aug. 5, 1993

60 Percent of Health Spending is Already Publicly Financed, Enough to Cover Everyone
Woolhandler, et al. “Paying for National Health Insurance – And Not Getting It,” Health Affairs 21(4); July / Aug. 2002

A Proposal for Financing National Health Insurance
Rasell, Edith “An Equitable Way to Pay for Universal Coverage,” International Journal of Health Services. 29(1); 1999

"Liberal Benefits, Conservative Spending"
Grumbach, et al. JAMA, May 15, 1991, Vol. 265 No. 19

"Markets and Medical Care: The United States, 1993-2005"
Joseph White, Case Western Reserve University, The Milbank Quarterly, Volume 85, Number 3, 2007

"Single Payer—Fifty Players: Alternative Payers for Universal Health Insurance"
Thomas Bodenheimer, Health/PAC Bulletin, Fall 1992

Paying More, Getting Less: How much is the sick U.S. health care system costing you?
Joel A. Harrison, Dollars and Sense magazine, May/June 2008 issue

Canadian Health Insurance: Lessons for the United States
June 1991; General Accounting Office (ref no: T-HRD-91-35)

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The Case Against For-Profit Care

Overview: The High Costs of For-Profit Care
Editorial by David Himmelstein, MD and Steffie Woolhandler, MD in the Canadian Medical Association Journal

For-Profit Hospitals Cost More and Have Higher Death Rates
Devereaux, PJ “Payments at For-Profit and Non-Profit Hospitals,” Can. Med. Assoc. J., Jun 2004; 170

Devereaux, PJ “Mortality Rates of For-Profit and Non-Profit Hospitals,” Can. Med. Assoc. J, May 2002; 166

For-Profit Hospitals Cost More and Have Higher Administration Expenses
Himmelstein, et al “Costs of Care and Admin. At For-Profit and Other Hospitals in the U.S.” NEJM 336, 1997

For-Profit HMOs Provide Worse Quality Care
Himmelstein, et al “Quality of Care at Investor-Owned vs. Not-for-Profit HMOs” JAMA 282(2); July 14, 1999

For-Profit Medicare Plans Cost 11 Percent More Than Traditional Medicare
MedPac Report, Jun 9, 2006

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Quality and Malpractice

Introduction: Medical Malpractice, Health Care Quality and Health Care Reform (pdf)
A Forum Report by Gordon Schiff, MD

How Single-Payer Improves Health Care Quality (pdf)
A brief by PNHP (makes a great handout!)

A Better Quality Alternative: Single-Payer National Health Insurance
Schiff, et al “A Better Quality Alternative” JAMA, 272(10); Sept. 12 1994

Comprehensive Quality Improvement Requires Comprehensive Reform (pdf)
Schiff, et al “You Can’t Leap a Chasm in Two Jumps,” Public Health Reports 116, Sept / Oct 2001

Quality of Care Under Single Payer National Health Insurance (pdf)
G. Schiff, 4/2007

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The Failures of Other Reform Options

Individual Mandates (The Massachusetts Plan)
Consumer Directed Health Care and Health Savings Accounts
Tax Credits for Private Insurance
Why HSAs Won't Cure What Ails U.S. Health Care
Critique of Sen. Wyden's (OR) "Healthy Americans Act"
Comparison between Schwarzenegger Health Plan and Single Payer for California

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State Single-Payer Bills

Issues for State Single-Payer Legislation
By Dr. Steffie Woolhandler
Key Features of Single-Payer
A useful handout to help recongnize state single-payer legislation
Health Spending By State Of Residence, 1991—2004
Health Affairs 26, no. 6 (2007): w651— w663
Side-by-side comparison of state single-payer bills
A comparison of the California, Maryland, Minnesota, Pennsylvania, and Wisconsin state single-payer bills.
Arizona
California - SB810
Colorado
Delaware
Illinois
Maryland (2011)
Minnesota
New York
North Carolina
Ohio
Oregon
Washington

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International Health Systems

International Health Systems for Single Payer Advocates
By PNHP Executive Director Dr. Ida Hellander
International Resources on National Health Insurance
Compiled by Joel A. Harrison, Ph.D., MPH
Health Care Systems - Four Basic Models
An excerpt from T.R. Reid’s book on international health care, "We’re Number 37!"

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Single-Payer Bibliography

The National Health Program Reader
Evidence based talking points on single payer
A bibliography of single-payer studies and papers

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Other Resources

Single-payer cartoons

Physicians for a National Health Program
29 E Madison Suite 602, Chicago, IL 60602 ¤ Find us on a map
Phone (312) 782-6006 | Fax: (312) 782-6007 | email: info@pnhp.org
© PNHP 2013

« Room for Debate Home

A Simpler, Better Solution

David Himmelstein and Steffie Woolhandler are professors at the City University School of Public Health at Hunter College and visiting professors at Harvard Medical School. They are co-founders of Physicians for a National Health Program.

Updated September 26, 2013, 1:37 PM

Gordon Schiff, an expert on medical quality, frequently admonishes: “Avoid workarounds.” It’s better to fix system defects than to force doctors and nurses to squander time and creativity (and to court disaster) by sidestepping problems like broken equipment, missing charts or computer bugs.

The Affordable Care Act is a giant workaround. Overwhelming evidence says that public insurers like Medicare (with overhead costs of 2 percent) are more efficient than private ones (overhead of private Medicare Advantage plans is 14 percent). And multiple insurers means multiple contracts, with varying coverage, billing procedures, documentation requirements, etc. – all of which force doctors and hospitals to waste billions more. The obvious fix is to cut out the insurance middlemen and cover everyone under a single public program paid for by taxes – with equal coverage for all. But the insurance lobby blocked that, so instead the Affordable Care Act took the Rube Goldberg route.

The obvious solution is a single-payer system. Instead, the Affordable Care Act is a giant workaround, wasting time and money and ruining lives.

If your income is below $31,321 for a family of four (133 percent of the poverty line), you will get Medicaid (unless you live in a red state that declined the federal assistance, like Texas or Alabama). And “Medicaid” nowadays means a privately run Medicaid H.M.O. But make one dollar more (or if Junior moves out, leaving a family of three) and Medicaid disappears; now you’re shopping for subsidized private insurance in the state-run exchange. That’s not a rare occurrence: 28 million adults cross the 133 percent line annually.

In the exchange, “bronze” plans look cheapest – at first glance. But if your income is under 250 percent of poverty there are special discounts for copayments, but only in “silver” plans.

Move from 400 percent of poverty to 401 percent, and individual premiums rise $2,303. Can’t quit smoking? Add $3,365.

Stop paying your premium? You’ll stay enrolled for three months, but your insurer only has to pay your medical bills for one month.

The health care law’s consumer protections apply to everyone, except the 58.5 percent of private sector workers whose employers self-insure.

Employers who do not offer coverage must pay a fine, unless you work less than 30 hours a week, averaged over three months, or maybe 12 months.
Small employers can get help with premiums, unless they buy coverage through a Taft-Hartley Fund.

Got it? We don’t either. And there’s much more arcane detail that can mean life or death for thousands, penury or plenty for millions.

Government already pays two-thirds of total health costs, but much of that money takes a detour through a maze of private insurers. This manufactured complexity sows confusion and adds huge expense – the cost of a workaround.

Join Room for Debate on Facebook and follow updates on twitter.com/roomfordebate.

Topics: Affordable Care Act, Obamacare, Politics, health care

Obamacare hysteria: Don't believe the canceled insurance hype

Obamacare hysteria: Don't believe the canceled insurance hype

Victimized by her insurer, and then by lousy news reporting? Diane Barrette, 56, of Winter Haven, Fla. seen here in a screenshot from a CBS news report broadcast this week. (CBS News)

 

 

By Michael Hiltzik

 

October 30, 2013, 10:20 a.m.

Obamacare's critics are going to town on the cancellation letters millions of Americans are receiving from their health insurers, informing them that their health plans won't conform to the new federal standards for health coverage as of Jan. 1.

We're supposed to be scandalized by this, since President Obama himself assured everyone that if they liked their insurance they'd be able to keep it. And people just love plans that in some cases cost just $50 a month. At that price, what's not to love?

Back in March, Consumer Reports published a study of many of these plans and placed them in a special category: "junk health insurance." Some plans, the magazine declared, may be worse than none at all.

Consumer Reports is right. Plans with monthly premiums in the two figures marketed to customers in their 30s, 40s, or even 50s invariably impose ridiculously low coverage limits. They've typically been pitched to people who couldn't find affordable insurance because of their age or preexisting conditions, or who were so financially strapped that they were lured by the cheap upfront cost.

"People buy a plan that's terrible," says Nancy Metcalf, CR's senior project editor for health, "and if they get sick, they don't even know they don't have insurance."

An example from CR: A plan costing $65 a month held by Judith Goss, 48, a Michigan department store employee. When Goss was diagnosed with breast cancer, she discovered the drawbacks of the policy's coverage limits of $1,000 a year for outpatient treatment and $2,000 for hospitalization -- barely enough to cover a day and half a Tylenol in the hospital. She delayed treatment, so her cancer got much worse before she finally opted for surgery. Those sorts of coverage limits are illegal  come Jan. 1.

Many of the supposedly bereft insurance customers being paraded before viewers of network and cable news -- and dredged up by House Republicans during today's theatrical grilling of Health and Human Services Secretary Kathleen Sebelius -- fall into this junk category. The news reporters never seem to lay out the benefits actually provided by these low-premium policies their subjects supposedly love, or their steep back-end costs if they actually get sick.
Consider the case of Diane Barrette, the 56-year-old Florida woman whose cancellation horror story was reported by a credulous CBS News and picked up by Fox News, which has been a one-stop shop for your Obamacare misinformation needs. (We mentioned the Barrette case on Tuesday.)

CR's Metcalf examined Barrette's Blue Cross Blue Shield policy and made two discoveries: how junky it really is, and how badly her insurer may have misled her about her options. Barrette's $54 monthly premium bought her almost nothing. The policy pays $50 per office visit (which can run two or three times that) and $15 per prescription (which can run to thousands of dollars a month); above that she's on her own. Nothing for a colonoscopy. Nothing for mental health treatment. Up to $50 for hospital and ER services -- and then only if her treatment is for "complications of pregnancy." Nothing for outpatient services.
"She's paying $650 a year to be uninsured," said an insurance expert Metcalf consulted. If she ever had a serious medical problem, "she would have lost the house she's sitting in."

As for the replacement plan her insurer offered, at a shocking $591 a month? Barrette has much better options via the government insurance exchange. (Or she will once the federal system gets running.) Metcalf estimated that she'll be eligible for "real insurance that covers all essential health benefits" for as little as $165 a month -- a higher premium than she's paying now, sure, but one that won't cost her her home. 

That raises the question of whether the insurers sending out these cancellation notices are trying to cheat their customers, a point made by Paul Waldman at the American Prospect and echoed by Kevin Drum at Mother Jones. Expecting insurance companies to play fair with their customers is as pointless as expecting dogs not to drink from the toilet, but what's the excuse of the reporters who retail these yarns without fully checking them out?

It's time to tamp down the breathless indignation about these health plan cancellations. Many of the departing plans are being outlawed for good reason, and many of the customers losing them have no idea how much financial exposure they were saddled with in the old days. That's the real scandal in American health insurance, and Obamacare is designed, rightly, to fix it.

 

 

Reach me at @hiltzikm on Twitter, on Facebook or by email.

Ohio Governor Defies G.O.P. With Defense of Social Safety Net

Politics

Ohio Governor Defies G.O.P. With Defense of Social Safety Net

 

Ty William Wright for The New York Times

Gov. John R. Kasich of Ohio said of fellow Republicans in Washington, "I’m concerned about the fact there seems to be a war on the poor."

By TRIP GABRIEL

Published: October 28, 2013 

COLUMBUS, Ohio — In his grand Statehouse office beneath a bust of Lincoln, Gov. John R. Kasich let loose on fellow Republicans in Washington.

“I’m concerned about the fact there seems to be a war on the poor,” he said, sitting at the head of a burnished table as members of his cabinet lingered after a meeting. “That if you’re poor, somehow you’re shiftless and lazy.”

“You know what?” he said. “The very people who complain ought to ask their grandparents if they worked at the W.P.A.” 

Ever since Republicans in Congress shut down the federal government in an attempt to remove funding for President Obama’s health care law, Republican governors have been trying to distance themselves from Washington. 

Gov. Scott Walker of Wisconsin schooled lawmakers in a Washington Post opinion column midway through the 16-day shutdown on “What Wisconsin Can Teach Washington.” Gov. Chris Christie of New Jersey, with a record of bipartisan support at home, remarked after a visit to the nation’s capital, “If I was in the Senate right now, I’d kill myself.” 

But few have gone further than Mr. Kasich in critiquing his party’s views on poverty programs, and last week he circumvented his own Republican legislature and its Tea Party wing by using a little-known state board to expand Medicaid to 275,000 poor Ohioans under President Obama’s health care law.

Once a leader of the conservative firebrands in Congress under Newt Gingrich in the 1990s, Mr. Kasich has surprised and disarmed some former critics on the left with his championing of Ohio’s disadvantaged, which he frames as a matter of Christian compassion. 

He embodies conventional Republican fiscal priorities — balancing the budget by cutting aid to local governments and education — but he defies many conservatives in believing government should ensure a strong social safety net. In his three years as governor, he has expanded programs for the mentally ill, fought the nursing home lobby to bring down Medicaid costs and backed Cleveland’s Democratic mayor, Frank Jackson, in raising local taxes to improve schools. 

To some Ohio analysts, those moves are a reaction to the humiliating defeat Mr. Kasich suffered in 2011 when voters in a statewide referendum overturned a law stripping public employees of bargaining rights. Before the vote, Mr. Kasich’s approval in this quintessential swing state plunged. 

Now, as the governor’s image has softened, his poll numbers have improved heading into a re-election race next year against the likely Democratic nominee, Ed FitzGerald, the executive of Cuyahoga County. 

He still angers many on the left; he signed a budget in June that cut revenues to local governments and mandates that women seeking an abortion listen to the fetal heartbeat. Democrats see his centrist swing as mere calculation, a prelude to a tough re-election fight. 

“This is someone who realized he had to get to the center and chose Medicaid as the issue,” said Danny Kanner, communications director of the Democratic Governors Association. “That doesn’t erase the first three years of his governorship when he pursued polices that rewarded the wealthy at the expense of the middle class.” 

Ohioans earning in the top 1 percent will see a $6,000 tax cut under the latest budget passed by the Republican-led legislature, while those in the bottom fifth will see a $12 increase, according to Policy Matters Ohio, an independent research group. 

The governor dismissed the notion that his Medicaid decision was political. “I have an opportunity to do good, to lift people, and that’s what I’m going to do,” he said. “You know what?” he added, using a phrase he utters before aiming a jab. “Let the chips fall where they may.” 

The son of a mailman who grew up outside Pittsburgh, Mr. Kasich (pronounced KAY-sik) has said he didn’t meet a Republican until he arrived as a freshman at Ohio State. He has often showed an independent streak. He supported President Bill Clinton’s assault weapons ban while in Congress in 1994, and he teamed with Ralph Nader to close corporate tax loopholes. 

In the interview in his office, he criticized a widespread conservative antipathy toward government social programs, which regards the safety net as enabling a “culture of dependency.” 

Mr. Kasich, who occasionally sounds more like an heir to Lyndon B. Johnson than to Ronald Reagan, urged sympathy for “the lady working down here in the doughnut shop that doesn’t have any health insurance — think about that, if you put yourself in their shoes.” 

He said it made no sense to turn down $2.5 billion in federal Medicaid funds over the next two years, a position backed by state hospitals and Ohio businesses. 

Yet, at the same time Ohio under Mr. Kasich refused to run its own state insurance exchange as encouraged by the health care law, known as the Affordable Care Act. The governor said he did not believe that the law, which mandates that people buy insurance, will work. To the contrary, he said, “It’s going to throw people out of work and not control costs.”  

Expanding Medicaid, which became an option for states after the 2012 Supreme Court ruling upholding the health care law, is different, Mr. Kasich asserts. The governor argued all year that extending eligibility beyond poor mothers and children to include childless adults earning up to $15,860 will help thousands of the mentally ill and drug-addicted. 

The governor, whose brother is mentally ill, spoke of how Medicaid would get more people into treatment, decreasing the homeless and prison populations.

“For those who live in the shadows of life, for those who are the least among us,” Mr. Kasich said in a February speech, echoing the Bible, “I will not accept the fact that the most vulnerable in our state should be ignored.” 

In some ways, his balancing act has scrambled the usual ideological alliances. A Wall Street Journal editorial last week mocked his religion-based explanation for expanding Medicaid and labeled him “the Apostle Kasich.” 

But mental health groups that usually find Democrats more sympathetic are cheering. “It’s been an astonishing thing to watch,” said Terry Russell, executive director of the National Alliance for Mental Illness in Ohio. “Since he’s become governor we’ve received more for mental health care than any time in the past 20 years.” 

Still, the governor got nowhere with the legislature, where Republicans hold majorities in both houses and many conservatives are rankled with his half-embrace of Mr. Obama’s law. The right flank had dealt him an earlier defeat, refusing a proposal to raise taxes on oil and gas companies and use the money for an income tax cut — which Tea Party supporters called redistributing wealth. 

Ohio’s legislative districts have been drawn to create safe seats, a dynamic that increasingly pulled the General Assembly to the right. “So many of these legislators are really concerned about a Tea Party challenge,” said John C. Green, a political scientist at the University of Akron. 

The Ohio Liberty Coalition, a network of Tea Party groups, threatened a primary challenge to any lawmaker supporting the governor on Medicaid expansion. 

“We said, You’re supposed to be about limited-government and free markets, and we’re here to hold you accountable,” said Ted Stevenot, president of the Tea Party coalition. 

As a result, Medicaid expansion never came up for a vote in the General Assembly. The budget that lawmakers sent the governor in June even prohibited the expansion of Medicaid. But Mr. Kasich vetoed the item, and last week he did an end-run through a special committee known as the Controlling Board, which approves day-to-day adjustments to the budget. 

He also used his leverage to stack the board in his favor. A senior member of the Kasich administration acknowledged in interviews that it pressed Republican leaders of the legislature — the House speaker and Senate president — to assure a majority of “yes” votes on the board. 

Hours before the vote on Oct. 21, two “no” votes were replaced with other members, one of whom voted for expansion, increasing the margin in favor to 5-2. “The fix was in,” said one disgruntled Republican in the House, Representative Matt Lynch. 

Tea Party leaders acknowledge that Mr. Kasich won the round. Although some grass-roots activists may refuse to help him next year, he seems unlikely to face a serious primary challenger on his right flank. “Our governor’s numbers among Republicans are very good,” said Matt Borges, chairman of the Ohio Republican Party. 

The governor cast a cold eye on hard-liners in his party, especially in Washington. “Nowhere in life do we not compromise and give,” he said. 

This article has been revised to reflect the following correction:

Correction: October 31, 2013

An article on Tuesday about a decision by Gov. John R. Kasich of Ohio to defy his party by defending social programs and expanding Medicaid under President Obama’s health care law misstated the final vote of the Controlling Board, a little-known state board used by Mr. Kasich to push through the expansion. It was 5 to 2, not 7 to 2.

A version of this article appears in print on October 29, 2013, on page A1 of the New York edition with the headline: Ohio Governor Defies G.O.P. With Defense of Social Safety Net.

Frequently Asked Questions about Sequestration: An Update for FY 2014

Committee on the Budget – Democrats
U.S. House of Representatives

Frequently Asked Questions about Sequestration: An Update for FY 2014

Issues: Sequester

Sequestration: The cancellation of budgetary resources, or holding back money that would otherwise be spent under current law.

 

                                                                                                                    

Background on Sequestration

The Budget Control Act of 2011 (BCA) contains two different mechanisms to achieve spending reductions, both commonly referred to as “sequester.”  The deficit reduction sequester requires nine annual sequesters of $109 billion – half from defense and half from non-defense programs – because the work of the Joint Select Committee on Deficit Reduction did not result in enactment of deficit reduction of at least $1.2 trillion.  The first of these annual sequesters took effect this spring (in fiscal year 2013).  The BCA also mandates separate discretionary sequesters if appropriations for any year exceeds the annual caps set by the law.  (See Question 4 below for further details on the categories of discretionary sequesters.)

The first deficit reduction sequester of approximately $109 billion had been slated to take place on January 2, 2013, but the fiscal cliff deal enacted at the end of the 112th Congress moved the date to March 1 and reduced the required spending cuts by $24 billion.  The deal also lowered the law’s discretionary caps by a total of $4 billion for 2013 and by $8 billion for 2014.

 

Frequently Asked Questions about Sequestration

How did the deficit reduction sequester work for 2013?

The BCA requires spending cuts that will accomplish the deficit reduction that the efforts of the Joint Select Committee on Deficit Reduction did not achieve.  The cuts, to be carried out over a nine-year period, take even amounts from defense and from non-defense spending, including both discretionary and mandatory programs.  The first round of cuts was implemented on March 1, 2013, through across-the-board cuts to all non-exempt programs: non-defense discretionary (NDD) programs were cut by 5.0 percent, non-defense mandatory programs by 5.1 percent, defense discretionary programs by 7.8 percent, and defense mandatory programs by 7.9 percent. However, specific limits apply to the sequester for certain programs, such as Medicare, which receives cuts to providers that are capped at 2 percent regardless of the size of the sequester. Agencies had minimal statutory authority to transfer some funding and impose the cuts in ways that minimized their impact, but each non-exempt account had to be cut by the required percentage to produce savings of $85 billion.

How will the sequester work for 2014 through 2021?

Sequestration of mandatory spending programs will work the same way as it did in 2013.  The percentage cuts to mandatory programs are shown in the box below.

However, the sequester for discretionary programs for 2014 through 2021 is intended to be implemented by adhering to lowered defense and non-defense spending caps, and not (as it was in 2013) through an across-the-board cut to already-enacted spending. Thus, Congress can choose to cut or spare individual programs through the appropriations process.

If funding for any year exceeds a discretionary cap there is a backup discretionary sequester that would cut all non-exempt programs in the category by the percentage required to remove the breach. (The rules of this discretionary sequester are slightly different than the deficit reduction sequester. See question 7 below for additional details.) For example, if Congress were to enact a clean Continuing Resolution (CR) for all programs that do not yet have appropriations enacted for 2014, both defense and non-defense caps would be breached. The resulting discretionary sequester would cut $1.6 billion from NDD spending and $19.9 billion from defense spending. The defense cut is larger because Congress increased 2013 defense spending above the initial cap primarily because: (1) different definitions of “security” spending under the original cap and “defense” spending under the cap in the fiscal cliff deal resulted in more defense spending and less non-defense spending for 2013; and (2) the fiscal cliff deal decreased the size of the 2013 sequester, and virtually all of the spared defense spending is discretionary, which allowed more defense spending than in 2014, when the defense cap is lower.

How much of the sequestration comes from discretionary versus mandatory spending?

The bulk of sequestration savings comes from discretionary programs (those funded by annual appropriations bills) as opposed to mandatory programs (also known as direct spending, or entitlement spending, where a program’s annual cost is generally determined by eligibility criteria established by law).  The required savings are to come half from defense programs and half from non-defense programs.  Within each half, the savings are allocated to discretionary and mandatory programs based on the contribution each makes to the total of discretionary budget authority and sequesterable direct spending.  Because defense has almost no mandatory funding subject to sequestration, almost all of the defense portion will come from discretionary programs.  On the non-defense side of the budget, mandatory programs will account for about one-third of the non-defense savings.  Thus, almost all defense savings and about two-thirds of non-defense savings will come from discretionary programs.

What are the firewalls and categories for discretionary caps? 

The BCA set different spending caps for different discretionary categories, separated by a “firewall” for enforcement purposes.  If a cap is breached in one category, the firewall requires an offsetting discretionary sequester only within that portion of discretionary spending rather than across all discretionary categories.

For 2014 through 2021, the firewalls and caps are set for the categories of non-defense spending and defense, which is the federal budget’s national defense function. It includes the Department of Defense, nuclear-energy related activities at the Department of Energy, the national security activities of several other agencies such as the Selective Service System, and portions of the activities of the Coast Guard and Federal Bureau of Investigation. (The 2013 firewall used a slightly different, broader security category that also included all programs within the Departments of Homeland Security and Veterans Affairs, and accounts in the International Affairs budget function.)

What percentage of the cut is in “defense” versus “non-defense” programs?

The deficit reduction sequester requires that half of the savings come from defense programs and half from non-defense programs.

Is funding for Overseas Contingency Operations (OCO) exempt from the discretionary sequester?

No.  Classification as OCO does not necessarily exempt spending from a discretionary sequester. However, to the extent that OCO funding is covered by other exemptions in the law, it will be exempt.  As specifically allowed under the law, the President has exempted military personnel from the sequester.  As a result, the military personnel accounts classified as OCO will also be exempt.

Which programs will be sequestered?

For 2013, the deficit reduction sequestration applied individually to all discretionary and mandatory programs that are not specifically exempted by budgetary law. In its March 1 report to Congress, OMB listed how much each account was to be cut. As described in question 2 above, the discretionary sequester for 2014 through 2021 is designed to work differently – to be implemented through caps on spending, with Congress allocating spending for each program beneath the cap.

On the discretionary side of the budget for 2014 through 2021, an across-the-board sequester cut will only occur if appropriations provided by Congress breach the lowered caps in any of those years. The total amount of the cut is determined by the amount appropriations are in excess of the cap. Like the 2013 deficit reduction sequester, some programs would be exempted from a discretionary sequester order.  Pell grants, spending from most transportation trust funds (which support highways, mass transit, and airports), all programs administered by the Department of Veterans Affairs, and – if the President deems it so – military personnel accounts, would be exempt from a discretionary sequester. However, unlike the deficit reduction sequester, discretionary administrative funds for programs that are otherwise exempt, including those for veterans services, would be subject to a discretionary sequester.

It is also important to note that to comply with the lowered discretionary cap levels in the future, Congress could choose to cut any discretionary program, including programs such as Pell grants or veterans’ health care, that would be exempt from an across-the-board sequester.

On the mandatory side of the budget, the bulk of spending is either exempt or subject to a special rule. Social Security is exempt from sequester cuts, as are many programs that serve low-income beneficiaries, including Medicaid, Supplemental Nutrition Assistance Program (formerly called food stamps), Supplemental Security Income, and Temporary Assistance for Needy Families. Federal retirement and disability accounts and veterans’ programs are exempted, as are most refundable tax credits. Other specific exemptions include a variety of government insurance programs and activities funded from private donations or voluntary contributions. Most of Medicare payments to providers are subject to sequestration but limited to a 2 percent reduction. (Some of Medicare is exempt and a small portion is subject to the full sequester.) Farm support programs comprise the largest component of the remaining mandatory spending subject to full sequestration.

Who determines the size of the required cut, and when will we know the specifics?

OMB manages all aspects of the sequester. The law specifies that OMB estimates are to be used to determine both which programs are exempt from the sequester and the size of the cut on the remaining programs. Neither the Congressional Budget Office nor the Budget Committees plays a role in implementing the sequester.

OMB has issued a report showing the size of the 2013 cut to each budgetary account, and a report estimating the percentage cut to mandatory programs for 2014. On the discretionary side, until Congress enacts 2014 funding we cannot know how each program will fare. If appropriations exceed either of the post-sequester discretionary caps, that discretionary sequester would occur 15 days after the end of the Congressional session.

How much discretion does the President have in how the sequester is applied?

Almost none. The President does not have discretion to vary the size of the cut to agency budgets. The President has exercised his authority to exempt military personnel accounts from sequestration. That does not change the total defense sequester; it just increases the cut to other defense programs under a defense discretionary sequester. Agencies will continue to have their existing specific transfer authority.

Is there a waiver of the deficit reduction sequester?

There is no waiver of the deficit reduction sequester unless there is a declaration of war.  The only option for changing it would be to enact legislation to amend the BCA.

Are there current proposals to repeal the 2014 sequester?

Democrats have repeatedly proposed to replace the sequester with at least as much deficit reduction through a balance of targeted spending cuts and revenue from eliminating  subsidies to big oil and gas companies and implementing a “Buffett Rule” ensuring that middle class families do not face higher effective tax rates than the wealthy. However, Republicans have not allowed the full House to vote on this proposal.

Sources for information mentioned in this report

OMB Sequestration Preview Report for 2014 and OMB Report on the Joint Committee Reductions for 2014 (corrected version of May 20, 2014):

http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy14_preview_and_joint_committee_reductions_reports_05202013.pdf

OMB report on the 2013 sequester, March 1, 2013:

http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy13ombjcsequestrationreport.pdf

The Budget Control Act of 2011 (P.L. 112-25): http://www.gpo.gov/fdsys/pkg/PLAW-112publ25/pdf/PLAW-112publ25.pdf

The American Taxpayer Relief Act of 2012 (H.R. 8, P.L. 112-240):

http://www.gpo.gov/fdsys/pkg/BILLS-112hr8enr/pdf/BILLS-112hr8enr.pdf

Congressional Research Service report on “Budget ‘Sequestration’ and Selected Program Exemptions and Special Rules,” November 23, 2011:

http://www.crs.gov/pages/Reports.aspx?PRODCODE=R42050&Source=search



This document has not been reviewed and approved by the Democratic Caucus of the House Budget Committee and may not necessarily reflect the views of all members. Years generally refer to fiscal years, unless noted or in bill titles.